The outlook for oil prices remains optimistic as Europe is preparing to impose an embargo on Russian energy. German Economy Minister Robert Habeck said on Monday that Germany would be ready to back an immediate European Union ban on Russian oil imports. He also acknowledged that the EU would have economic costs."Germany is not against an oil ban on Russia. Of course it is a heavy load to bear but we would be ready to do that," Habeck said. Nevertheless, according to the report published on Tuesday, German company Uniper remains in talks with Russia's Gazprom and the German government over how to implement Moscow's demand to pay for Russian gas in rubles. The news came after the European Commission called on member governments to phase out their dependency on Russian gas amid preparations for an embargo on Russian oil imports. In addition, a Reuters poll of five analysts forecast that the American Petroleum Institute will report another decline of 1.2 million barrels in crude inventories on average. This will exacerbate the already significant depletion of crude oil and fuel inventories. US inventories have declined by a total of 421 million barrels since July 2020. Total fuel reserves are well below the five-year average for this time of year. From a technical point of view, WTI crude oil quotes may well break above the level of $110 per barrel.
The long-term outlook for oil is also optimistic as Russia's crude oil production is falling faster than expected and much of it could be lost forever.OPEC posted a modest output increase last month. Analysts expect the cartel to report a 40,000 bpd monthly rise. This compares to some 250,000 bpd in monthly increases agreed by the OPEC+ members two years ago.
